One measure of the importance of an industry is its contribution to the Australian economy. The size of the Australian economy is typically described in terms of GDP, and the structure and performance of the economy in terms of industry gross value added (GVA).

GDP is an estimate of the total market value of goods and services produced in Australia in a given period after deducting the cost of goods and services used up in the process of production (intermediate consumption), but before deducting consumption of fixed capital. This is also described as the unduplicated value of economic production. This measure avoids double counting the goods and services produced at successive stages of production. Accordingly, it is a measure of the value added in production.

Industry GVA is the term used to describe the unduplicated value of goods and services produced by individual industries. This measure removes the distortion caused by variations in the incidence of commodity taxes and subsidies across the output of individual industries. Movements in the volume measures of GDP and industry GVA (from which the direct effects of price changes have been removed) are key indicators of economic growth. More information is provided in the National accounts chapter.

Table 15.1 provides details of industry GVA and GDP for 2005-06. Data are presented at a broad industry level, generally equating to the Division level of the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 (1292.0). In the ANZSIC, individual businesses are assigned an appropriate industry category on the basis of their predominant activities. The table provides estimates of the unduplicated production of goods and services (industry GVA) from 2001-02 to 2005-06.

In 2005-06, the value of Australian production (GDP) was $922 billion (b) (in volume terms), an increase of 2.8% from 2004-05. In 2005-06, the ratio of GDP to the estimated resident population (GDP per person) was $44,526.

Graph 15.2 shows the average annual rate of growth in GVA (in volume terms) for individual industries between 1995-96 and 2005-06. The Communication services industry had the highest average annual rate of growth (6.3%), followed by the Construction (5.9%) and Property and business services industries (5.1%).

While average annual growth rates provide an indicator of the broad underlying behaviour of the annual series over several years, these averages smooth the annual movements in the series and mask the highest and lowest movements. In terms of year-on-year changes, the fastest growing industry in this period, the Communication services industry, showed strong and relatively steady increases in GVA from 1995-96 to 1998-99. After this period, the year-on-year increases were much lower. In 2005-06, GVA of the Communication services industry rose by 7.4%.

The year-on-year changes for the Agriculture, forestry and fishing industry also varied significantly over time. While the value of production (GVA) of this industry grew by 3.2% on average each year between 1995-96 and 2005-06, it fell by 24% in 2002-03, due largely to the effects of drought on agricultural production. This was followed by strong growth in 2003-04, immediately following the 2002-03 drought.

Another industry that has had significant variation in year-on-year changes, especially in recent years, is the Construction industry. In 2002-03, the GVA of the industry grew by 16%, with the previous financial year (2001-02) also recording strong growth (12%). This growth followed a fall of 14% in 2000-01, coinciding with the introduction of The New Tax System in July 2000. In 2005-06, GVA of the Construction industry rose by 8.3%.

15.2 Average annual rate of growth in the production of goods and services(a)(b) - 1995-96 to 2005-06

Graph 15.3 shows industry GVA shares of GDP (in current prices) in 1995-06 and 2005-06. The Property and business services industry contributed the largest share to GDP (11.4%) in 2005-06. This was followed by the Manufacturing industry (10.1%), and the Finance and insurance industry (7.1%).

Between 1995-96 and 2005-06, the largest increase in industry GVA share of GDP was for the Mining industry (up 2.3 percentage points). The next largest increases were for the Finance and insurance (1.6 percentage points), and Property and business services (1.2 percentage points) industries.

In the ten-year period, the largest fall in industry shares of GDP was for Manufacturing (down 3.3 percentage points). The next largest falls were for Agriculture, forestry and fishing, and Retail trade (both of which had a decrease of 0.7 percentage points).